Performance Metrics are a key determinant for gauging the effectiveness of affiliate programs. So, suppose you want to know the average revenue you are generating for every click you are driving to an offer. In that case, you have to take the help of Performance Metrics. EPC or Earnings per Click is one such Performance Metrics that helps you in a big way.
Most of the affiliates and internet marketing professionals are not aware of these important performance metrics – EPC (Earnings per Click) – so we thought it right to come up with a post describing each and every aspect of Earnings per Click.
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Definition of EPC (Earnings per Click)
It is described as a performance metric that gives the average earnings generated as a result of every click you get on your website, product page, or affiliate offer. So, EPC gives the average revenue for each click that you are driving to an offer.
It is the amount that you can expect to earn for every 100 clicks to an affiliate link. Affiliate marketing networks usually display it and help publishers compare the earning potential of different merchants.
The formula for calculating EPC is as follows:
Earnings / Number of Clicks
For example, if you received a commission of $250 by sending 100 clicks to an offer, then EPC would be $2.50.
250/100 = $2.5 EPC
EPC meaning in Affiliate Marketing
It is a perfect way to determine which offer performs better with different payouts.
Suppose an affiliate is running two offers, one with a payout of $36 and another with a $40. It is easy to presume that the $40 payout is a better offer. However, let us see how EPC helps to determine which offer is better.
Offer A with a $36 payout received 100 leads with a total of 700 clicks. As a result, the affiliate earns $3600, and the EPC comes out to be $5.14.
Offer B, with a $40 payout, received 70 leads with a total of 700 clicks. So, the affiliate earns $2800, and the EPC for the offer comes out to be $4.00.
So, in the above example, offer A has an EPC of $5.14, whereas offer B has an EPC of $4.00. It shows that an offer with a higher payout is not always a better option.
In the above example, the affiliate earns $1.14 per click more in Offer A when compared to Offer B, with an extra revenue of $800.
Thus, the percentage of clicks converted to completed transactions (such as purchasing an item or opening up an account) has a major effect on the EPC realized by an affiliate.
However, earnings per click cannot alone figure out the actual profit for the affiliates. You also have to consider the cost per click for knowing the actual money you are making with your affiliate campaigns.
Here’s how to figure out the net profit per click:
Net profit per click = earnings per click – cost per click
So, if your EPC is more than the cost per click, you are making money.
Finding Affiliate Offers
When it comes to finding which Affiliate Offers have higher ROI, the EPC is the number that matters the most. You may have a high-paying offer, but it does not mean that the offer is performing well. It’s the EPC that determines the effectiveness of an offer.
Suppose an offer has a payout of $80 generates 50 leads with a click of 100 in a month. So, its EPC turns out to be $40 per click. Another offer with a $100 payout generates 25 leads with a total click of 100 in a month. So, its EPC is $25 per click.
So, in the above case, it is obvious that you would promote an $80 payout offer instead of a $100 payout offer.
Thus, EPC helps in finding Affiliate offers.
PPC vs. EPC
PPC is the pay-per-click advertising model wherein advertisers pay the publisher each time their ads are clicked. Search Engine Advertising is one of the most important forms of PPC.
So, if a PPC advertiser is offering $2 per click, an advertiser pays $2 to a publisher whenever their ads get clicked.
The PPC price is not fixed; it depends on the advertiser how much he is willing to pay, and also a lot of other things are considered.
Whereas EPC is concerned with the total commission generated and how many clicks it has used to do it.
Suppose the total commission generated is $300 and the clicks triggered are 100; the EPC comes out to be $3 per click. It is calculated whenever the user completes a specific action, which generates a commission for the publisher.
We can use EPC in the PPC model too. For example, a Google AdSense publisher earned $300 in a month, and total clicks on ads were 200; now, the EPC will be $300/200 = $1.5.
This helps the publisher to know his expected income from AdSense and how he can increase his income.
So, we see that Earnings per Click (EPC) is an important performance metric that helps you calculate the earnings on an internet marketing campaign.